“As I had grown accustomed to my expectations, I had insensibly begun to notice their effect upon myself and those around me. Their influence on my own character, I disguised from my recognition as much as possible, but I knew very well that it was not all good. I lived in a state of chronic uneasiness respecting my behaviour,” wrote Charles Dickens at the beginning of Chapter 34 of his novel, Great Expectations.
Phillip Pirrip, aka “Pip,” was brought up to be a blacksmith’s apprentice but in his teens became convinced that he was to be the recipient of a mysterious benefactor and therefore set his sights on becoming a gentleman in London.
Becoming a gentleman was expensive and “I began to contract a quantity of debt,” says Pip. “We spent as much as we could, and got as little for it as people could make up their minds to give us. We were always more or less miserable,” declared Pip, adding that “our case was in the last respect a common one.”
That pretty much describes the state of Europe...and the world...these days. Great expectations have shrunk as the Greek and Spanish crises have expanded.
Polish sociologist Zygmunt Bauman has written in The Guardian: “After several decades of rising expectations, the present-day newcomers to adult life confront expectations falling – and much too steeply and abruptly for any hope of a gentle and safe descent. If there was bright light at the end of the tunnels their predecessors passed through, there is now a long, dark tunnel stretching behind every one of the few flickering, fast fading lights trying in vain to pierce through the gloom. With prospects of long-term unemployment and long stretches of "rubbish jobs" well below their skills and expectations, this is the first postwar generation facing the prospect of downward mobility.
Even in the United States, there is diminished expectations for what can be expected from the available monetary tools. “The economy seems unable to wean itself from dependence on the Fed’s flow of aid,” wrote the New York Times Binyamin Applebaum several weeks ago. “What began as a one-time jolt in 2008, an unprecedented effort to revive economic activity, has become an uncomfortable status quo, an enduring reality in which savers are punished and borrowers rewarded by a permafrost of low interest rates.”
As expectations fall, the pressure to do more of the same (with better results) expands.
Albert Einstein famously described insanity as doing the same thing over and over again and expecting different results. Our current monetary policies then certainly insanity.
In truth, expectations have been deteriorating for some time. Back in 1976, Lewis E. Lehrman wrote in Money in the Coming World Order: “Everywhere the value of money deteriorates. The burden of debt, public and private, mounts ever higher. Money it seems, serves less well as a reliable store of value and the means of payment. In a worldwide exchange economy, money no longer impartially mediates between limited resources and rising expectations. Instead, political power, either of governments or of private corporations and trade unions, more and more shapes and supplants the market economy.”